Finally! I have had two major gripes about Apple's iOS Developer model that are starting to be answered.
The first has been that Apple, in correctly recognizing that a surplus of app variety (i.e., "there's an app for that") would catalyze the success of iOS-powered devices, has fostered a race to the bottom in terms of app pricing.
Unfortunately, price commoditization creates an environment where developers can't possibly grow into large companies ($100M+ revenues), such that the icon for breakout success on iPhone and iPad is Angry Birds, perhaps a $20-30M business.
In truth, price commoditization creates a dynamic where very few developers can grow beyond lifestyle businesses, if that.
Sidebar: Read 'The iPhone, the Angry Bird and the Pink Elephant,' my analysis on how the Post-PC era is shaping up for software developers relative to past computing eras.
The second major gripe that I've had has been that the consumer-centricity of App Store, and the concept of App Store as the only viable way to distribute iOS software, is at odds with a primary means that businesses embrace to acquire software: System Integrators (SI) and Value Added Resellers (VAR).
For the uninitiated, SIs and VARs are best thought of as channels that:
- Build custom software for companies (as opposed to consumers);
- Install, integrate, configure and support software within a company's IT infrastructure, typically on lots of devices.
In fact, Apple's fuzzy-to-non-existent position in this category, coupled with the woeful state of the enterprise as an IT innovator, lead me to question just two days ago whether the enterprise is simply 'dead' as a viable market penetration strategy for Post-PC device makers.
Apple announces Custom B2B Apps for Business
Well, ask and ye shall receive, for Apple just announced a program specifically geared towards what they call 'Custom B2B Apps for Business.'
It offers two primary things that as a developer, I am excited and hopeful about.
One is a mechanism enabling third-party developers to sell their custom business apps outside of the App Store, and take bulk orders via volume purchasing mechanisms provided by Apple.
On both the transaction and distribution side of the equation, this addresses the case of third-party developers creating and selling 'seats' of custom iOS software to specific corporate customers (as opposed to the general consumer universe).
Moreover, because it sidesteps the App Store, the program mitigates developers being forced to broadcast their customers to competitors, and the App Store being littered with apps that are custom-built for one customer.
Raising the Floor on App Pricing...but there's a catch
The other thing that this program does is it sets a floor on pricing of $9.99, which reboots app pricing logic from "everything should be 99 cents or free" to something more akin to historical packaged software and custom software pricing models.
There are some caveats, though. One is that to actually participate in the program, your customer needs to be big enough to have set up a Dun & Bradstreet (D-U-N-S) number for their company, and THEY need to have signed up to participate in the App Store Volume Purchase Program for Business.
Put another way, while I as a developer need a program so I can sell custom-built iOS offerings directly to businesses, what Apple is actually giving me is a program for enterprises to sign up for Volume Purchases of apps in the app store, and a subset of that program deals with the case where the enterprise wants to buy truly custom iOS software directly from a third-party developer, like me.
While that may sound like semantics, in truth, it raises the bar for developers wanting to pursue business customers as a core focus, since only a certain type of customer can buy from them, and that customer has to get set up in the Apple program, in addition to the developer's own commitment to Apple.
In the pattern recognition bucket, there's an axiom that if you raise the bar a half inch, you lose 90% of the audience, all of which casts some doubt on how successful this program, as configured, will be.
A Taxing Question: attached to Apple's teat in perpetuity?
Also, while in concept Apple is acknowledging that such custom apps will need to do a bunch of things that would be atypical of App Store apps, nonetheless such apps still have to go through the standard App Store approval process.
As such, it remains to be seen just how "custom" Apple will allow developers to get, and where they'll draw the line.
To be clear, this a non-trivial concern when you understand that selling into corporate environments often means integrating with a bunch of legacy crap, mapping to wacky UI conventions and supporting non-intuitive workflows.
By definition, taking care of the customer could create scenarios where the developer is in technical violation of Apple's rules.
What will Apple do in such cases, and what happens if they change their mind (as they are sometimes prone to do), and you have a written license with the enterprise that you can no longer perform on?
Finally, unclear in this case is whether Apple is taking their 30% cut for an app that doesn't even sell through the App Store, but that only leverages their tools and their transaction model?
In such cases, Apple's 30% cut starts to feel more like an onerous tax than a fair exchange of value.
That said, I am going to give Apple the benefit of the doubt that they'll get to the 'right answer' for the customer, developer and themselves alike.
So far, their batting average has been pretty good, iAds, MobileMe and Ping, notwithstanding.
Here's an excerpt from Apple's announcement of the new program (full link is HERE):
Custom B2B apps are designed to provide tailored solutions that extend the possibilities of iPhone and iPad in business. For example, a custom B2B app could offer:
- A customized user interface including company logo or branding
- Unique features or capabilities specific to a business process or workflow
- Extra privacy protection to handle sensitive data
- A specific configuration to meet the customer’s server/back-office environment or IT environment
- Features targeted to a limited audience, such as a business partner, dealer, or franchise
Businesses can buy custom B2B apps from developers in a private transaction through the Volume Purchasing Program. The minimum price for a custom B2B app is $9.99.
Related:
- Is the enterprise dead as a tablet strategy? (O'Reilly Radar)
- The iPhone, the Angry Bird and the Pink Elephant (O'Reilly Radar)
- The Scorpion, the Frog and the iPhone SDK